 "Tata Steel to decide on UK future in 4 weeks: UK report")
In a volatile day of boardroom drama last Friday, a statement by the independent directors of Tata Steel board to give a clear picture to all shareholders about the goings-on in the company was first adopted unanimously by the independent directors but was shelved as three directors backed out.
According to a source on the board, the six independent directors had met separately just before the board meeting in Bombay House, with Mallika Srinivasan joining through a video link. One of the independent directors, had drafted a statement of the independent directors that was circulated among the six directors at
1:30 am, hours before Friday afternoon’s board meeting. The independent directors discussed the statement later, approved it at one stage, but when some directors backed out, they did not issue it to the stock exchanges, a source said.
The independent directors of Tata group companies had met separately on the day of the board meetings and issued a statement to shareholders. Independent directors of Indian Hotels and Tata Chemicals had issued a statement in support of Mistry at both companies’ board meetings earlier. However, at the Tata Steel meeting, independent directors Mallika Srinivasan, wife of TVS group chairman Venu Srinivasan, O P Bhatt and Andrew Robb had forced Wadia to drop the resolution to back chairman Cyrus Mistry.
The independent directors of Tata Steel, too, were planning to issue a statement to shareholders, a source said. Tata Steel has been in the eye of the storm, especially after Mistry’s statement that it was facing a $10-billion potential write-down from its loss-making European operations.
The draft of the statement said: “The independent directors confirm that all decision taken by the board with regard to the strategy, operations and business of the company have been unanimous and executed accordingly. This includes the actions currently underway in respect of the drive to restore Tata Steel Europe and in particular Tata Steel UK to a sustainable profitability.”
The statement added, “The board of directors further affirm the company continues to be governed, supervised and management under the guidance and directions of the board. The board is not aware of the need for any material impairments of assets or businesses over and above those taken till date,” the statement said. “The management of the company and its subsidiaries have the full confidence and support of the board,” it added.
A director said, “The statement was not supporting Mistry at all, and yet these three directors objected to it.”
In the first draft of the statement, one of the directors first asked to remove any reference to the word “Chairman” which was agreed by the rest of the independent directors. Another independent director went out of the room, got the statement re-typed and the independent directors agreed unanimously that the new version of the statement would be sent to the stock markets, so as to assuage the investors’ sentiment.
The independent directors took the statement to the Tata Steel board, which was on a different floor in Bombay House, and a suggestion was made to make this statement from the entire board and not only from independent directors. But as Chairman Cyrus Mistry was an interested party, and other executive directors did not want the statement to be made on behalf of the entire board, it was decided that only independent directors would make this statement. That was when one of the independent directors said that Wadia had coerced the independent directors to make a statement to the public which was not necessary.
Wadia then reconvened the meeting of independent directors in which three independent directors - decided against making any statement to the stock exchanges. “All the proceedings are in the audio records of the meeting,” said a director asking not to be quoted. “We have asked all the transcripts of the meeting to be converted into minutes of the meeting so that there is no discrepancy later,” the director said. The director said the Tata Sons board had asked for all the details of investments/sale of European assets, discussions with unions and UK government that goes against the spirit of corporate governance. “Any material information given to one set of shareholders is a breach of insider trading norms,” said the director. In fact, the director said Tata Sons refused to invest in Tata Steel’s rights issue just nine months ago when the company was starving for funds to bring its European operations back on rails. Similarly, the sale of Tata Motors shares by Tata Steel was also shelved. All this was done to make it difficult for Mistry to turn around the company that has lost billions of dollars from its European operations.
“As independent directors, we have a fiduciary duty to minority shareholders and we will bring all these facts before the public before the extraordinary general meeting,” the director said. Sources said Wadia would write a letter to all the shareholders.
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